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Understanding Bandwidth Charges in Colocation Services

In colocation services, bandwidth charges constitute a significant portion of the billing structure. While the term “bandwidth” traditionally refers to the capacity of a connection, in this context, it represents the amount of data transferred to and from the server during a billing cycle. Providers typically include a base amount of data transfers with their packages, measured in gigabytes (GB), and charge additional fees for exceeding the allotted bandwidth.

Billing Structure

  1. Base Allocation: Most providers offer a base amount of data transfers, ranging from a few gigabytes to several hundred, depending on the package.
  2. Excess Usage Fee: If data transfers exceed the allotted bandwidth, providers impose fees. These fees vary and can range from pennies to several dollars per GB.
  3. Billing Methods: Actual billing can occur through two methods:
  • Straight Data Transfer Rates: Common for small servers with low bandwidth usage.
  • 95th Percentile: Often used for larger servers with fluctuating usage patterns.

What is the 95th Percentile?

The 95th percentile is a statistical measure that identifies the smallest number greater than 95% of the values in a given set. It is a crucial metric for measuring data throughput and determining data center bandwidth costs.

Calculation Example:

  1. Data Monitoring: Providers monitor the server’s network port, recording data transfer rates every 3 to 5 minutes.
  2. Database Storage: Recorded rates are stored in a database throughout the billing cycle.
  3. 95th Percentile Determination: At the end of the cycle, the database is queried to identify the rate at the 95th percentile.
  4. Bandwidth Usage Formula: The 95th percentile rate is multiplied by the billing cycle length to calculate bandwidth usage.


Example #1:

  • Over a 30-day period.
  • Web server receives 30GB of traffic.
  • 28 days have .5GB/day, and the last two days have 8GB/day.
  • 95th percentile is around .5GB/day.
  • Bandwidth charge: (.5GB/day) * (30 days) = 15GB

Example #2:

  • Over a 30-day period.
  • Web server receives 30GB of total traffic.
  • 20 days have a small amount of traffic not exceeding 1GB, and the remaining 10 days see 3GB/day.
  • 95th percentile is 3GB.
  • Bandwidth charge: (3GB/day) * (30 days) = 90GB

In both examples, the 95th percentile calculation determines bandwidth charges, highlighting how sustained data transfer rates impact costs. While the 95th percentile benefits those with intermittent usage, it can be expensive for sites with consistently high transfer rates. Understanding these nuances is crucial for effective bandwidth management and cost control in colocation services.

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